The first month of the new year saw Africa enter the fray of U.S. politics. The Trump administration announced last week it would halt immigration from Nigeria — Africa’s most populous nation with the continent’s largest economy and leading tech sector.
The presidential proclamation stops short of a full travel ban on the country of 200 million, but it suspends immigrant visas for Nigerians seeking citizenship and permanent resident status in the U.S.
The latest regulations are said not to apply to non-immigrant, temporary visas for tourist, business and medical visits.
The new policy follows Trump’s 2017 travel ban on predominantly Muslim countries. The primary reason for the latest restrictions, according to the Department of Homeland Security, was that the countries did not “meet the Department’s stronger security standards.”
Nigeria’s population is roughly 45 percent Muslim and the country has faced problems with terrorism, largely related to Boko Haram in its northeastern territory.
Restricting immigration to the U.S. from Nigeria, in particular, could impact commercial tech relations between the two countries.
Nigeria is the U.S.’s second largest African trading partner and the U.S. is the largest foreign investor in Nigeria.
Increasingly, the nature of the business relationship between the two countries is shifting to tech. Nigeria is steadily becoming Africa’s capital for VC, startups, rising founders and the entry of Silicon Valley companies.
Recent reporting by VC firm Partech shows Nigeria has become the number one country in Africa for venture investment. Much of that funding comes from American sources. The U.S. is arguably Nigeria’s strongest partner on tech and Nigeria, Silicon Valley’s chosen gateway for entering Africa. Examples include Visa’s 2019 investment in Nigerian fintech companies Flutterwave and Interswitch and Facebook and Google’s expansion in Nigeria.
Nigerian entrepreneur Iyinoluwa Aboyeji, who co-founded two tech companies — Flutterwave and Andela — with operations in the U.S. and Lagos, posted his thoughts on the latest restrictions on social media.
“Just had an interesting dinner convo about this visa ban with Nigerian tech professionals in the U.S. Sad… but silver lining is all the amazing and experienced Nigerian talent in U.S. tech companies who will now head on home,” he tweeted.
Notable market moves in African tech last month included an acquisition, global expansion and a couple big raises.
Nigerian digital payments startup Paga acquired Apposit, a software development company based in Ethiopia, for an undisclosed amount.
The Lagos-based venture also announced it would launch its payment products in Mexico this year and in Ethiopia imminently, CEO Tayo Oviosu told TechCrunch
The moves come a little over a year after Paga raised a $10 million Series B round and Oviosu announced the company’s intent to expand globally while speaking at Disrupt San Francisco.
Paga will leverage Apposit — which is U.S. incorporated but operates in Addis Ababa — to support that expansion into East Africa and Latin America.
Paga has created a multi-channel network to transfer money, pay bills, and buy goods digitally. The company has 14 million customers in Nigeria who can transfer funds from one of Paga’s 24,411 agents or through the startup’s mobile apps.
With the acquisition, Paga absorbs Apposit’s tech capabilities and team of 63 engineers. The company will direct its boosted capabilities and total workforce of 530 to support its expansion.
On the raise side, San Francisco and Lagos-based fintech startup Flutterwave (previously mentioned) raised a $35 million Series B round and announced a partnership with Worldpay FIS for payments in Africa.
The company will use the funding to expand capabilities to provide more solutions around the broader needs of its clients. Uber, Booking.com and Jumia are among the big names that use Flutterwave to process payments.
Last month, Africa’s logistics startup space gained another multi-million-dollar round with global backing. Kenyan company Sendy, an on-demand platform that connects clients to drivers and vehicles for goods delivery, raised a $20 million Series B led by Atlantica Ventures. Toyota Tsusho Corporation, a trade and investment arm of Japanese automotive company Toyota, also joined the round.
Sendy’s raise came within six months of Nigerian trucking logistics startup Kobo360’s $20 million Series A backed by Goldman Sachs. In November, East African on-demand delivery venture Lori Systems hauled in $30 million supported by Chinese investors.
The company plans to use its raise for new developer hires, to improve the tech of its platform, and toward expansion in West Africa in 2020.
Sendy’s $20 million round also includes an R&D arrangement with Toyota Tsusho Corporation to optimize trucks for the West African market, Sendy CEO Mesh Alloys told TechCrunch.
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With the funding, Flutterwave will invest in technology and business development to grow market share in existing operating countries, CEO Olugbenga Agboola — aka GB — told TechCrunch.
The company will also expand capabilities to offer more services around its payment products.
“We don’t just want to be a payment technology company, we have sector expertise around education, travel, gaming, e-commerce, fintech companies. They all use our expertise,” said GB.
That means Flutterwave will provide more solutions around the broader needs of its clients.
The Nigerian-founded startup’s main business is providing B2B payments services for companies operating in Africa to pay other companies on the continent and abroad.
Launched in 2016, Flutterwave allows clients to tap its APIs and work with Flutterwave developers to customize payments applications. Existing customers include Uber, Booking.com and e-commerce company Jumia.
In 2019, Flutterwave processed 107 million transactions worth $5.4 billion, according to company data.
Flutterwave did the payment integration for U.S. pop-star Cardi B’s 2019 performances in Nigeria and Ghana. Those are two of the countries in which the startup operates, in addition to South Africa, Uganda, Kenya, Tanzania, Zambia, the U.K. and Rwanda.
“We want to scale in all those markets and be the payment processor of choice,” GB said.
The company will hire more business development staff and expand its developer team to create more sector expertise, according to GB.
“Our business goes beyond payments. People don’t want to just make payments, they want to do something,” he said. And Fluterwave aims to offer more capabilities toward what those clients want to do in Africa.
Olugbenga Agboola, aka GB
“If you are a charity that wants to raise money for cancer research in Ghana, or you want to sell online, or you’re Cardi B…who wants to do concerts in Africa…we want to be able to set up payments, write the code and create the platform for those needs,” GB explained.
That also means Flutterwave, which built its early client base across global companies, aims to serve smaller African businesses, including startups. Current customers include African-founded tech companies, such as moto ride-hail venture Max.ng.
The new round makes Flutterwave the payment provider for Worldpay in Africa.
In 2019, Worldpay was acquired for a reported $35 billion by FIS, a U.S. financial services provider. At the time of the purchase, it was projected the two companies would generate revenues of $12 billion annually, yet neither has notable presence in Africa.
Therein lies the benefit of collaborating with Flutterwave.
FIS’s Head of Ventures Joon Cho confirmed the partnership with TechCrunch. FIS also backed Flutterwave’s $35 million Series B. US VC firms Greycroft and eVentures led the round, with participation of Visa, Green Visor and African fund CRE Venture Capital.
Flutterwave’s latest funding brings the company’s total investment to $55 million and follows a year in which the fintech venture announced a series of weighty partnerships.
In July 2019, the startup joined forces with Chinese e-commerce company Alibaba’s Alipay to offer digital payments between Africa and China.
Flutterwave’s $35 million round and latest partnership are among the reasons the startup has become a standout in Africa’s digital-finance landscape.
As a sector, fintech gains the bulk of dealflow and the majority of startup capital flowing to African startups annually. VC to Africa totaled $1.35 billion in 2019, according to WeeTracker’s latest stats.
While a number of payment startups and products have scaled — see Paga in Nigeria and M-Pesa in Kenya — the majority of the continent’s fintech companies are P2P in focus and segregated to one or two markets.
Flutterwave’s platform has served the increased B2B business payment needs spurred by the decade of growth and reform that has occurred in Africa’s core economies.
The value the startup has created is underscored not just by transactional volume the company generates, but the partnerships it has attracted.
A growing list of the masters of the payment universe — Visa, Alipay, Worldpay — have shown they need Flutterwave to do finance in Africa.